Segmentation

Thompson-Smith is one of Australia’s largest retailers. They have around 1,000 different stores, across five
brands, namely:
Tommy’s Supermarkets (500 stores),
Tommy’s Clothing (17 stores),
Smith’s Shoes (100 stores),
Smith and Chips (300 stores), and
T+S Gas (fuel) (100 stores).
They have set their vision as being Australia’s number three retailer, behind the two dominant players. They
have defined their strategic priorities as:

  1. Reposition the Supermarket chain
    Tommy’s generally targets budget shoppers. It primarily competes with lower-priced, smaller supermarkets
    chains. It is important that we reposition our stores as full-service, higher quality supermarkets. This will enable
    us to compete directly with the major chains. As part of this strategy, we will introduce ‘fresh food’ sections of
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    our supermarkets, relocate many stores to more prominent locations, and introduce a broad range of private
    label brands.
  2. Add Tommy’s Clothes Online
    Online channels have been slowly taking a greater share of retail sales. To date, Thompson-Smith has not
    entered the world of e-tailing. Tommy’s Clothes, our chain of fashion clothing stores has been chosen as the
    first venture into multi-channel retailing In order to promote this new channel, a significant promotional effort
    (using mainly billboard advertising) will be embarked upon over the next 12 months.
  3. Franchise Smith’s Shoes
    Our chain of men’s shoe stores has been performing generally well. However, there is a clear franchise trend
    within the Australian market at the moment. Therefore, this presents a growth opportunity for us. The plan is to
    franchise around half of the existing stores and to add another 100 stores through franchising.
  4. Redesign Smith and Chip’s Stores
    Our chain of fast food (fish and chips) stores is lacking in the facilities of our more aggressive competitors, in
    particular McDonald’s. Over the next five years, all our stores will be redesigned to include a kid’s playground,
    lounge area, a drive-through, and increased parking. In order to gain a competitive advantage, we plan to add
    an ‘amusement arcade’ section (which will both generate income and differentiate us in the marketplace).
  5. Enhance the Loyalty Programs of T+S Gas/Fuel
    This sector is becoming more competitive, with the joint ventures of the major supermarkets with existing
    gas/fuel suppliers. In order to compete, we need add a loyalty program that provides an incentive to purchase
    petrol (based on a discount earned from purchases at our other stores).
    QUESTIONS
    (Please answer each question with more than an “I agree” -at least 25 words)
  6. To what extent do you agree with their strategy for one of these #1-4?
  7. To what extent do you agree with their strategy for another one of these #1-4?
  8. To what extent do you agree with their strategy for their loyalty program?
  9. What other strategies could they possibly consider?

Sample Solution

ACED ESSAYS